THIRD CIRCUIT FINDS IMPERMISSIBLE THREAT OF LEGAL ACTION IN USE OF THE WORD “COULD”

The United States Court of Appeals for the Third Circuit has held that a collection letter impermissibly threatened legal action in violation of the federal Fair Debt Collection Practices Act by stating that a refusal to cooperate “could” result in a legal suit being filed for collection of the account. Brown v. Card Serv. Ctr., 2006 WL 2788476, *4 (3rd Cir. Sept. 29, 2006). In reaching its conclusion, the court vacated the lower court’s decision granting the defendant’s motion to dismiss. The court, reviewing the letter under the “least sophisticated” debtor standard, found that the facts as alleged by the debtor, if proven, could result in the letter being deemed “deceptive” or “misleading” under Section 1692e. The court based this finding on the fact that the defendant had no intention of filing suit and has never or very rarely taken such action.

Margaret Stolar and Charles Gall